BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 552
                                                                  Page  1

          Date of Hearing:   June 14, 2000

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT 
                                John Longville, Chair
                   SB 552 (Kelley) - As Amended:  February 22, 2000

           SENATE VOTE  :   39-0
           
          SUBJECT  :   County water authorities.

           SUMMARY  :   Authorizes the San Diego County Water Authority  
          (SDWA) to sell hydroelectric power generated by that authority  
          through the Power Exchange (PX). 
           
          EXISTING LAW  :   

          1)Grants county water authorities specific powers to use their  
            water, works, facilities, improvements and property to  
            generate and deliver hydroelectric power.

          2)Provides for the restructuring of electrical services industry  
            and, in this connection, provides for the creation of the  
            Power Exchange.

           FISCAL EFFECT  :   None

           COMMENTS  :   Due to a need for water storage in the event of a  
          major earthquake, the SDWA has been planning for the creation of  
          the Emergency Storage Project  (ESP).  The ESP would consist of  
          a new reservoir near the unincorporated community of Olivenhain  
          in San Diego County, and an interconnection to the existing  
          reservoir at Lake Hodges that includes a pumping plant and  
          tunnels.  The project is scheduled for completion in 2003.  

          According to SDWA, it became apparent during the planning stages  
          of this project that excess hydroelectric power would be  
          produced.  SDWA intends to use this excess power to help defray  
          the cost of the ESP construction by selling this power to a  
          market-based hydroelectric power wholesaler, the PX.

          The PX (a creation of the 1996 electrical industry deregulation  
          and restructuring) is a non-profit, non-public entity intended  
          to provide an open, efficient and competitive auction of  
          electrical power to meet customers' electricity demands.  As a  
          recently created entity, the PX is not specifically designated  








                                                                  SB 552
                                                                  Page  2

          as one of the entities to which water authorities can sell  
          power.  Currently, all county water authorities are authorized  
          to "provide, sell and deliver hydroelectric power to the State,  
          any public agency, private corporation or any other person or  
          entity or combination thereof" (Water Code App. Sec. 45-5.1).   
          This bill adds the PX to this list, which will give SDWA the  
          ability to sell its excess hydroelectric power and ultimately  
          defray the costs of the ESP.

          Initially this bill was referred to both the Assembly Committees  
          on Water, Parks & Wildlife, and to Local Government.  However,  
          the current language of the bill brought it within the  
          jurisdiction of the Utilities and Commerce Committee, where it  
          was referred and subsequently passed with a 9-0 vote on April 3,  
          2000.

           REGISTERED SUPPORT / OPPOSITION  :

           Support  

          San Diego County Water Authority [SPONSOR]
          Regional Council of Rural Counties 
          Association of California Water Agencies

           Opposition  

          None on file

           Analysis Prepared by  :    Frances Chacon / L. GOV. / (916)  
          319-3958